From Florida to Hawaii, real estate attorneys continue to break the law. In one of the latest cases, a Georgia lawyer was charged in a mortgage fraud scheme designed to pump up his used car business.
Lawyer Eric Hipe’s alleged scheme cost lenders more than $500,000, according to the federal prosecutors in Atlanta that have charged him with fraud.
“We will continue in particular to focus on lawyers and other professionals who are involved in mortgage fraud,” U.S. Attorney David E. Nahmias said in a statement. “They know the rules, and when they break them, they should expect one day to end up in prison.”
Hipe has pleaded guilty to charges of mail fraud, money laundering and mail fraud.\
According to Nahmias Hipe and his business partner, Eric Friedman — who has also pleaded guilty — operated a used car business named Hipe Motors. In order to raise money for the business Hipe purchased four new condominiums in the Atlanta area.
Hipe and Friedman conspired to inflate Hipe’s income so they could borrow more money for the used car business and for Friedman’s personal expenses, Nahmias said.
Friedman prepared false loan applications using phony supporting documents, including tax returns, which misrepresented Hipe’s income. Hipe signed the documents “certifying them as accurate and true,” Nahmias said.
“In order to pull money from the closings (Friedman and Hipe) misrepresented to the lenders that a portion of the loan proceeds would be used for the renovation and construction of the properties, even though the condominiums were new,” Nahmias said.
When Hipe and Friedman were unable to draw more money out of the condos they arranged a phony sale of the properties, using Hipe’s mother as a “straw buyer” of three of the condos.
The lenders foreclosed on the properties when Hipe and the others failed to make payments.
Hipe and Friedman face up to five years in prison and fines of $250,000. Two others allegedly involved in the scheme go on trail in December.
In Florida, a prominent lawyer has been disbarred and charged with three felony charges after allegedly misappropriating more than $683,000 from clients trust account for his own use, according to state prosecutors.
In convicted he could spend up to 65 years.
Vincent Whibbs, 61, allegedly “induced” a couple to invest $150,000 in a commercial mortgage that would return up to 8 percent in just three months, Assistant State Attorney Russ Edgar said in an interview with MortgageDaily.com.
“He promised a good rate of return in a short period of time,” Edgar said.
But Whibbs actually needed the money to repay some of the cash he had pilfered from the trust accounts, according to the charges.
When the couple that invested in what they thought was a mortgage wanted their money, Whibbs avoided them, Edgar said.
After “months and months” of waiting, they eventually visited Edgar’s office, he said.
The trust account money was allegedly taken by Whibbs over several years. He allegedly also used some of the money to pay expenses at a condominium he co-owns.
In October Whibbs was disbarred after admitting he took the money from the trust account, according to a ruling from the Florida Supreme Court.
A lawyer from Hawaii whose bad advice to an Oregon couple over a real estate deal cost them $62,000 and forced them into bankruptcy has been suspended from practice.
Lauren J. Paulson was suspended in October, The Oregon Supreme Court said in a ruling. Paulson’s suspension will last six months, according to the court order.
The ruling indicates that Paulson represented a retired couple “who had encountered problems with the installation of their new modular home.”
“Although Paulson knew that the clients’ concerns related to delays in the installation and the quality of the contractor’s work, he encouraged the couple to sue their mortgage broker and lender for failing to disclose certain terms of credit for their construction loan,” the court found. “Neither the mortgage broker nor the lender had caused the delays or faults in the installation.”
Paulson then allegedly mishandled the case by failing to stay in contact with his clients, refusing to cooperate with court orders and by causing “the clients to suffer actual injury,” according to the Supreme Court ruling.
A lower court actually ordered the couple to pay attorney’s fees of $62,000 after their case was dismissed.
“The attorney fee award forced the clients to file bankruptcy,” the Supreme Court said in its order.
Paulson then interfered with the bankruptcy filing by trying to file motions even after the clients said they no longer wanted his services.